What is soft covenant in SAP FS-FBS-CML-LWP - SAP Loans Workplace?

SAP Term: soft covenant

• Component: FS-FBS-CML-LWP

• Component Name: SAP Loans Workplace

• Description: Covenants that do not entitle the lender to terminate the contract but trigger other obligations on the part of the borrower.

Smart SAP Assistant

• Key Concepts: 
  Soft covenant is a term used in SAP Loans Workplace (FS-FBS-CML-LWP) to refer to a type of agreement between a lender and borrower. It is a less stringent form of agreement than a hard covenant, which requires the borrower to adhere to certain conditions or face penalties. Soft covenants are more flexible and allow the borrower more freedom in terms of repayment terms and other conditions. 
  
  How to use it: 
  When setting up a loan agreement, lenders can choose between hard and soft covenants. Soft covenants are typically used when the lender has more trust in the borrower's ability to repay the loan, or when the loan is for a shorter period of time. The lender can also set up specific conditions for the soft covenant, such as requiring regular payments or setting limits on how much money can be borrowed. 
  
  Tips & Tricks: 
  When setting up a loan agreement, it is important to consider both hard and soft covenants. Hard covenants provide more security for the lender, but may be too restrictive for some borrowers. Soft covenants provide more flexibility for the borrower, but may not provide enough security for the lender. It is important to consider both options carefully before making a decision. 
  
  Related Information: 
  For more information on soft covenants and other types of loan agreements, please refer to SAP's documentation on FS-FBS-CML-LWP SAP Loans Workplace. Additionally, there are many online resources available that provide further information on loan agreements and how to set them up.